Paul Wallbank – Brilliant Communications

Tag: amazon

  • Moving on from the gadget era

    Moving on from the gadget era

    Yesterday at the launch of the next generation of Kindle e-readers Amazon’s CEO Jeff Bezos observed why the various Google Android based tablets have failed.

    Why? Because they’re gadgets, and people don’t want gadgets anymore. They want services that improve over time. They want services that improve every day, every week, and every month.

    Throughout the industrial revolution progress and innovation was about creating products that improved people’s lives – whether it was Josiah Wedgwood making affordable crockery, Thomas Edison commercialising the light bulb or Henry Ford making cheap motor cars available to the masses – these innovations changed the way we lived or did business.

    In the late Twentieth Century business focused more on creating gadgets and our lives became a race to accumulate more useless tat to store in our big McMansions to store the junk in.

    We wore out our credit cards and home equity in “buying stuff we don’t need to impress people we don’t like” throughout the 1990s and early 2000s.

    Today that’s changed, consumers are now more cautious and, despite the efforts of governments to prop up the broken system, the great credit boom is over.

    Jeff Bezos is onto this, instead of Amazon offering me-too products that don’t add value,  “people don’t want gadgets anymore. They want services that improve over time.”

    The word ‘service’ is notable — one of the things Amazon have achieved is changing how customers use books and DVDs from outright purchases that they can trade and sell to licensed products where Amazon and publishers control distribution.

    Amazon are consolidating their position as one of the big four Internet empires. How Google, Apple and PayPal respond to Amazon’s suite of services will define much of the online economy.

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  • How much server space do Internet companies need to run their sites?

    How much server space do Internet companies need to run their sites?

    “How much server space do companies like Google, Amazon, or YouTube, or for that matter Hotmail and Facebook need to run their sites?” is the question I’ve been asked to answer on ABC Radio National Drive this evening.

    This isn’t a simple question to answer as the details of data storage are kept secret by most online services.

    Figuring out how much data is saved in computer systems is a daunting task in itself and in 2011 scientists estimated there were 295 exabytes stored on the Internet, desktop hard drives, tape backup and other systems in 2007.

    An exabyte is the equivalent of 50,000 years worth of DVD video, a typical new computer comes with a terabyte hard drive so one exabyte is the equivalent of a million new computers.

    The numbers when looking at this topic are so great that petabytes are probably the best way of measuring data, a thousand of these make up an exabyte. A petabyte is the equivalent to filling up the hard drives of a thousand new computers.

    Given cloud computing and data centres have grown exponentially since 2007, it’s possible that number has doubled in the last five years.

    In 2009 it was reported Google was planning to have ten million servers and an exabyte of information. It’s almost certain that point has been passed, particularly given the volume of data being uploaded to YouTube which alone has 72 hours worth of video uploaded every minute.

    Facebook is struggling with similar growth and it’s reported that the social media service is having to rewrite its database. Last year it was reported Facebook users were uploading six billion photos a month and at the time of the float on the US stock market the company claimed to have over a 100 petabytes of photos and video.

    According to one of Microsoft’s blogs, Hotmail has over a billion mailboxes and “hundreds of petabytes of data”.

    For Amazon details are harder to find, in June 2012 Amazon’s founder Jeff Bezos announced their S3 cloud storage service was now hosting a billion ‘objects’. If we assume the ‘objects’ – which could be anything from a picture to a database running on Amazon’s service – have an average size of a megabyte then that’s a exabyte of storage.

    The amount of storage is only one part of the equation, we have to be able to do something with the data we’ve collected so we also have to look at processing power. This comes down to the number of computer chips or CPUs – Central Processing Units – being used to crunch the information.

    Probably the most impressive data cruncher of all is the Google search engine that processes phenomenal amounts of data every time somebody does a search on the web. Google have put together an infographic that illustrates how they manage to answer over a billion queries a day in an average time of less than quarter of a second.

    Google is reported to own 2% of the world’s servers and they are very secretive about the numbers, estimates based on power usage in 2011 put the number of servers the company uses at around 900,000. Given Google invests about 2.5 billion US dollars a year on new data centres, it’s safe to say they have probably passed the one million mark.

    How much electricity all of this equipment uses is a valid question. According to Jonathan Koomey of Stanford University, US data centres use around 2% of the nation’s power supply and globally these facilities use around 1.5%.

    The numbers involved in answering the question of how much data is stored by web services are mind boggling and they are growing exponentially. One of the problems with researching a topic like this is how quickly the source data becomes outdated.

    It’s easy to overlook the complexity and size of the technologies that run social media, cloud computing or web searches. Asking questions on how these services work is essential to understanding the things we now take for granted.

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  • Culture beats strategy

    Culture beats strategy

    Writer and business consultant Joseph Michelli says”Culture beats strategy, in fact it eats it for breakfast and lunch”.

    This was one of the key points in a recent webinar about online retailer Zappos and its customer service culture.

    Joseph’s right, the culture of an organisation is the ultimate key to its success, if managers and staff work “according to the book” and declaring “it’s not my job” then you end up with a siloed organisation where management are more interesting in protecting and growing their empires over helping customers.

    With Zappos it’s interesting how it appears easy the integration into Amazon’s ownership has gone and this is probably because both have service centric cultures.

    Both companies seem to have avoided employing Bozos as Guy Kawasaki famously put it a few years ago.

    Your parking lot’s “biorhythm” looks like this:

    • 8:00 am – 10:00 am–Japanese cars exceed German cars
    • 10:00 am – 5:00 pm–German cars exceed Japanese cars
    • 5:00 pm – 10:00 pm–Japanese cars exceed German cars

    Guy’s German car observation is spot on. When I was running a service business, one measure I used for a potentially troublesome client was how many expensive German cars were in the executive parking spaces, it was usually a good indicator that an organisation’s leaders are more interested in management perks than maintaining their technology.

    Another useful measure was where those cars are parked, a good indicator of management’s sense of entitlement is when executive parking spots are conveniently next to the building entrance or lift lobby while customers expected to find a spot anywhere within ten blocks.

    It all comes down to culture and when management are more concerned about parking spots and staff about free lunches, you know you’re dealing with an organisation where the customer – or the shareholder – isn’t the priority.

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  • Why VCs hate Amazon

    Why VCs hate Amazon

    “Venture capital investors hate us” said Dr Werner Vogels, CTO of Amazon.com at the April Sydney FED, “once you needed five million dollars to launch a new technology business, today you need $50,000 and a big box of ramen.”

    Dr Vogels was talking about the Amazon Web Services (AWS) platform that underpins many of the cloud computing and social media sites which are redefining how we use computers and the web.

    What’s really interesting with the doctor’s comment is it’s only part of the story; for businesses outside the tech sectors –say retailers or service companies – they get cheap or even free access to the cloud computing services running on AWS or its cloud competitors like Windows Azure.

    For those businesses, it’s possible to start an idea for nothing but the founder’s time; rather than putting fliers up at the local bus stop or shopping mall an entrepreneur starting an online store or neighbourhood computer repair business now can create a website and all the local search profiles without spending a cent.

    Being able to start up a business with little, if any, capital means we’re seeing a new breed of innovators and entrepreneurs entering markets.

    At the corporate level, or in the $50 million dollar VC investment field, the opportunities for exploring Big Data without buying big supercomputers is another benefit of the cloud computing services.

    Services like ClimateCorp which insures farmers against extreme weather couldn’t have existed a few years ago as the processing power to analyse historical rain and drought data was only available to those with insanely expensive super computers.

    Today, the combined power of millions of low powered cheap computers – the definition of cloud computing – delivers the processing grunt of a supercomputer at a fraction of the cost.

    Access to cheap computing power means innovations can be bought to market quickly and at a fraction of the cost that was normal a decade ago.

    We’re in early days with what the effects of super cheap computing means to most industries, but it is changing industries as diverse as agriculture, banking, logistics and retail quickly.

    Cloud computing is giving big business the tools to understand their markets better and small business the ability to grab customers from bigger competitors who are too slow or don’t want to face what their clients really think.

    These are the forces that are changing the way business is being done; if you’re in business it’s time to start paying attention.

    In reality, Dr Vogels is pulling our legs – the smart VCs aren’t hating Amazon, they are rubbing their hands at the profits that are going to be made in disrupting cosy industries.

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  • The Internet’s cold war

    The Internet’s cold war

    “We’re designing exclusively for Android devices,” the software developer confided over a beer, “we don’t like the idea of giving Apple 30% of our income.”

    That one business owner is making a choice that software developers, newpaper chains, school text book publishers and many other fields are going to have to make in the next year – which camp are they going to join in the Internet’s cold war.

    As the web matures, we’re seeing four big empires develop – Google, Apple, Facebook and Amazon which are going to demand organisations and consumers make a choice on who they will align with.

    That decision is going to be painful for a lot of business; each empire is going to take a cut in one way or another with Apple’s iStore charges being the most obvious.

    For those who choose to go the non-aligned path – develop in HTML5 and other open web standards things will be rocky and sometimes tough. At least those on the open net won’t have to contend with a “business partner” whose objectives may often be different to their own.

    Over time, we’ll see the winners and losers but for the moment businesses, particularly big corporations and publishers should have no doubt that the choices they make today on things as seemingly trivial things like reader comments may have serious ramifications in a few years time.

    Consumers aren’t immune from this either; those purchases through iTunes, Amazon or Google are often locked to that service for a reason.

    Probably the development that we should watch closest right now is Apple’s push into education publishing; those governments, universities and schools that lock into the iPad platform are making a commitment on behalf of tax payers, faculty and students that will affect all of them for many years.

    For many, it might be worthwhile hedging the bets and sticking to open standards. A decision to join one or two of the big Internet empires is something that shouldn’t be made lightly.

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